The financial department monitors case-mix index (CMI), and in an ideal world, the hospital’s CMI would be as high as possible. A high CMI means the hospital performs big-ticket services and therefore receives more money per patient.

To calculate CMI, choose a time period (e.g., one month) to examine. Within that time, take all the DRGs your hospital billed and add up the relative weights (RW). Now, divide that number by the total number of DRGs. What you are left with is your hospital’s CMI for that month.

Finance departments consider CMI when determining the hospital’s budget. If the hospital’s actual CMI is less than what the finance department predicted, the hospital may experience a loss in revenue. Even seemingly small changes in CMI have a large effect on the hospital’s bottom line. A 0.10 change in CMI affects a hospital with a hospital specific rate of $4,500.

CMS determines hospital-specific rates based on geographic location and overhead costs, graduate medical education costs, and indigent patients served. CDI departments can use CMI like a barometer of change within an organization, Spryszak says.

If your CMI drops, it could be a sign of change in surgical or medical volumes, for example. Similarly, if your hospital’s CMI is lower than hospitals in your area, it could be a sign that the hospital is not capturing the complications and comorbidities (CC) and major CCs (MCC) that group those accounts into a higher-weighted DRG.

A hospital can’t perform unnecessary services for the sake of improving CMI. However, there are ways to improve a hospital’s CMI. The first is to work with physicians to improve documentation. If patients have CCs and MCCs that reflect a higher level of complexity, the hospital can bill for a higher-weighted DRG. However, coders can only report what the physician documents in the patient’s record.

A strong CDI program will help physicians understand the importance of documentation. A strong CDI process supports opportunities to query physicians for a more specific diagnosis. Beyond documentation, improper admissions can also drive down a hospital’s CMI.

Remember, CMI is only concerned with the hospital’s inpatients. The DRG for an inpatient that could have been treated in the outpatient setting will have a low RW (e.g., 0.5 or 0.6). If this happens once or twice, it shouldn’t be an issue, but if a significant number of those patients are included in the inpatient equation, it will drive down the CMI, Spryszak says.

To solve the problem of improper inpatient admissions, Jennie Edmundson took level of care decisions out of the physicians’ hands. Before admitting a patient, physicians write an order to “admit to case management protocol.” A case manager then applies InterQual criteria to the physician’s documentation, and the physician signs off on the decision.

“Physician’s don’t base level of care on any criteria; they base it on length of stay, and that’s incorrect,” Olsen says.

Case managers at Jennie Edmundson also conduct concurrent assessments daily to ensure that each day is medically necessary. After implementing the case management protocol, Olsen saw the hospital’s CMI increase, in addition to seeing more appropriate inpatient admissions.

“In this day and age, case management departments should be paying attention to case-mix index, because it does affect reimbursement,” says Olsen.

Editor's Note: This article first appeared in the June editon of Case Management Monthly.

*MAGNET™, MAGNET RECOGNITION PROGRAM®, and ANCC MAGNET RECOGNITION® are trademarks of the American Nurses Credentialing Center (ANCC). The products and services of HCPro are neither sponsored nor endorsed by the ANCC. The acronym "MRP" is not a trademark of HCPro or its parent company.